Don't Ignore The Insider Selling In Zscaler

Some Zscaler, Inc. (NASDAQ:ZS) shareholders may be a little concerned to see that the Chief Legal Officer & Secretary, Robert Schlossman, recently sold a substantial US$1.3m worth of stock at a price of US$232 per share. That's a big disposal, and it decreased their holding size by 13%, which is notable but not too bad.

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The Last 12 Months Of Insider Transactions At Zscaler

Over the last year, we can see that the biggest insider sale was by the insider, Ajay Mangal, for US$38m worth of shares, at about US$202 per share. That means that an insider was selling shares at slightly below the current price (US$233). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 0.6% of Ajay Mangal's holding.

Zscaler insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership Of Zscaler

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Zscaler insiders own 35% of the company, worth about US$13b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Zscaler Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example - Zscaler has 1 warning sign we think you should be aware of.

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For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.